Assets in India-domiciled international equity funds jumped from ₹15,955 crore in 2020 to ₹98,182 crore by May 2026. This shift toward global markets is driven by US technology rallies, though experts warn investors about currency risks, high valuations, and the danger of ignoring local opportunities.
Indian investors have rapidly increased their exposure to global equities over the last five years, with assets under management in funds focusing on international markets climbing from ₹15,955 crore in December 2020 to ₹98,182 crore as of May 2026. This trend highlights a significant shift in portfolio strategy, as investors seek to participate in the growth of international technology firms, often fueled by enthusiasm for artificial intelligence and global market rallies.
Performance Gap and Investment Trends
The move toward global assets has been supported by the strong performance of international indices compared to domestic benchmarks over the past year. While the NASDAQ Composite index recorded a gain of over 26% during this period, the Nifty 50 experienced a decline of 4%. This performance disparity has prompted many retail and institutional investors to look beyond Indian borders, a pattern described by industry leaders as a classic reaction to recent market trends and the fear of missing out.
Understanding the Risks of Global Exposure
While diversifying into global markets is often viewed as a way to spread risk, experts emphasize that the current enthusiasm may lead to unintended consequences. One primary concern is the concentration of global portfolios in a small number of large US technology companies. If these companies face corrections, the lack of true diversification could leave investors exposed to significant losses. Furthermore, financial professionals point out that true diversification only occurs when an investor adds assets that behave differently from their existing holdings. If global investments are driven by the same news cycles and fundamentals as domestic ones, the benefit of geographic spread is reduced.
Currency and Regulatory Considerations
Investors are also cautioned against relying too heavily on currency tailwinds. The Indian rupee has depreciated by 12% against the US dollar over the past year, which has artificially boosted the returns of overseas investments for Indian holders. Should the currency movement reverse, these gains could erode quickly. Beyond market performance, investors must navigate complex regulatory requirements, including Liberalised Remittance Scheme (LRS) limits and strict tax compliance. Failure to properly manage these disclosures can lead to serious legal and financial issues, potentially outweighing the benefits of any market gains.
Moving forward, the focus for investors remains on whether these global equity themes can sustain their current valuations. Market experts suggest that investors monitor their exposure to ensure they are not simply chasing recent past performance. The effectiveness of this strategy will depend on balancing global growth opportunities with the inherent risks of currency fluctuations, regulatory changes, and the volatility associated with concentrated technology-heavy portfolios.